A merger of New York Stock Exchange Euronext Liffe, by German-run
Deutsche Boerse, has met with board approval, Tuesday February 15. European and U.S. regulators must approve unnamed trade group before the deal is solidified. Upon approval, it will be the world's largest holder of equities and derivatives.
European markets rose to its highest since 2008 but U.S. markets declined in the wake of dismal sales data and the fact that Exxon says it is running out of places to find oil.
According to an article on Businessweek.com, the newly formed structure, regarding futures market share, mirrors the Chicago Mercantile Exchange Group and U.S. options would be larger than the Chicago Board of Exchange, Inc. The article also said the merger may spur other securities exchange mergers. Financial industry insiders speculate that globally, mergers of established exchanges will fend off competition from upstart exchanges. The article went on to speculate that the CBOE and Nasdaq may be the next merger candidates. These mergers have the potential to positively impact long-term growth.
Hong Kong Exchanges & Clearing Ltd. is today's largest securities exchange in the world and even it wants to keep merger options open.
The response to the news of the merger was tremendous. There were
over 400 comments on the MSNBC news web site, Sunday morning, as a details of the deal were being hammered out. However, many commentators were skeptical of the merger's implications. Some led with conspiracy theory ideas and others expressed concern with regulatory limitations.
"Peter17" explained that profits from stock exchanges belong to the
shareholders not the countries in which they are formed. "If the NYSE
continues to make a profit in the U.S. they will pay taxes in the U.S.," was
the comment left on Friday, when the article was posted.
"Saxon" suggested to investors to buy assets and not to hold (USD) dollars.
More than one commenter said they could not appreciate the full scope of the
merger but felt that it would have an impact. Some even speculated about a
New World Order--reminiscent of chatter three decades past.
On the minds of commentators is globalization and the possibility of a new
United States currency, the Amero, which exists in theory.
"Mygirl1" said the U.S. is making its way toward trading in the theoretical
"Amero"--as the Europeans utilize the Euro in Europe. This commentator also
worried that the world's bankers would head up a "new world order" and
control the world's finances.
But more than a new world order, the newly formed entity will have to title itself to show equity among the participants although Deutsche Boerse will hold 60 percent of the newly-formed merger, the Businessweek article said.
"TruePatriot-445959" said because financiers have always worried about oil-
rich countries trading oil in currencies other than the U.S. dollar, this
merger is helpful and will introduce more regulation and consistency into the
market which is helpful to the United States.
One commentator,"smeagol likes raw fishes," said the merger may fail in that
Frankfurter Boerse has been outbid before in a takeover. However, that was not the case in this instance. Deutsche Boerse was outbid by NYSE Group, in an attempt to acquire the London Stock Exchange in 2006. Frankfurter Boerse is the world's oldest securities exchange--created in the 1500s--and is one of eight owned by Deutsche Boerse.
If the deal is deemed legal by domestic and international regulators, Deutsche Boerse AG (XETRA:DB1) and NYSE Euronext (NYSE:NYX) will combine to create the largest venue for capital raising and equities trading. The combined group will offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions, according to a press release on the Euronext web site. The profit in the merger is found with the structure's ability to trade futures and options, industry experts claim.
According to a released statement by Euronext, the transaction is structured as a combination of Deutsche Boerse and NYSE Euronext under a newly created Dutch holding company, which is expected to be listed in Frankfurt, New York and Paris. On the NYSE Euronext side, this will be effected through a merger of NYSE Euronext and a US subsidiary of the new holding company in which each NYSE Euronext share will be converted into 0.4700 of a share of the new holding company. On the Deutsche Boerse side, the new holding company will launch a public exchange offer, in which shareholders of Deutsche Boerse may tender their shares of Deutsche Boerse for an equal number of shares of the new holding company.
Following full completion of the contemplated transactions, the former Deutsche Boerse shareholders would own 60 percent of the combined group and the former NYSE Euronext shareholders would own 40 percent of the combined group on a fully diluted basis and assuming that all Deutsche Boerse shares are tendered in the exchange offer. The transaction is expected to close at the end of 2011.
Principal financial advisers to Deutsche Boerse are Deutsche Bank and J.P. Morgan Securities LLC. Principal financial advisers to NYSE Euronext are Perella Weinberg Partners, and BNP Paribas. Legal advisers are Linklaters to Deutsche Boerse and Wachtell, Lipton, Rosen & Katz, Stibbe N.V. and Milbank, Tweed, Hadley & McCloy LLP to NYSE Euronext. Further financial advice is being provided by Credit Suisse, Goldman, Sachs & Co., Morgan Stanley & Co. Inc., and Societe Generale.
The release also said the group will have dual headquarters, in Deutsche Boerse’s newly built green tower near Frankfurt and in New York, at 11 Wall Street, home to the New York Stock Exchange trading floor, and will take advantage of its existing global operations. The Company will be led by a one-tier board with 17 members –15 directors plus the Chairman and the CEO. Of the 15 directors, nine will be designated by Deutsche Boerse and six by NYSE Euronext. Reto Francioni will be Chairman, and will also be responsible for group strategy and global relationship management. Duncan Niederauer will be Chief Executive Officer and will lead an Executive Committee with an equal number of current Deutsche Boerse and NYSE Euronext executives.
The four NYSE Euronext executives are Niederauer as CEO, based in New York, Dominique Cerutti as Head of Technology Services & IT, based in Paris, Lawrence Leibowitz as Head of Cash Trading and Listings and John K. Halvey as General Counsel, both based in New York. The four executives coming from Deutsche Boerse are Andreas Preuss as Head of Derivatives, based in Frankfurt, Jeffrey Tessler as Head of Settlement & Custody, based in Luxembourg, Frank Gerstenschlaeger as Head of Market Data & Analytics and Gregor Pottmeyer as Chief Financial Officer of the combined group, both based in Frankfurt.
Andreas Preuss will assume the role of Deputy CEO and President. Dominque Cerutti will assume the role of President, and Lawrence Leibowitz will assume the role of Chief Operating Officer.
The combined group will have 2010 combined net revenues of EUR[1] 4.1 billion/US$ 5.4 billion, and 2010 EBITDA of EUR 2.1 billion /US$ 2.7 billion, thus becoming the world’s largest exchange group by revenues and EBITDA. Based on 2010 net revenues, the combined group will earn approximately 37percent of total revenues in derivatives trading and clearing, 29 percent in cash listings, trading and clearing, 20 percent in settlement and custody, and 14 percent in market data, index and technology services.
Sources:
Businessweek.com
Euronext.com
MSNBC.com
The Chronicle U.S.A.
MSNBC.com
Deutsche Boerse, has met with board approval, Tuesday February 15. European and U.S. regulators must approve unnamed trade group before the deal is solidified. Upon approval, it will be the world's largest holder of equities and derivatives.
European markets rose to its highest since 2008 but U.S. markets declined in the wake of dismal sales data and the fact that Exxon says it is running out of places to find oil.
According to an article on Businessweek.com, the newly formed structure, regarding futures market share, mirrors the Chicago Mercantile Exchange Group and U.S. options would be larger than the Chicago Board of Exchange, Inc. The article also said the merger may spur other securities exchange mergers. Financial industry insiders speculate that globally, mergers of established exchanges will fend off competition from upstart exchanges. The article went on to speculate that the CBOE and Nasdaq may be the next merger candidates. These mergers have the potential to positively impact long-term growth.
Hong Kong Exchanges & Clearing Ltd. is today's largest securities exchange in the world and even it wants to keep merger options open.
The response to the news of the merger was tremendous. There were
over 400 comments on the MSNBC news web site, Sunday morning, as a details of the deal were being hammered out. However, many commentators were skeptical of the merger's implications. Some led with conspiracy theory ideas and others expressed concern with regulatory limitations.
"Peter17" explained that profits from stock exchanges belong to the
shareholders not the countries in which they are formed. "If the NYSE
continues to make a profit in the U.S. they will pay taxes in the U.S.," was
the comment left on Friday, when the article was posted.
"Saxon" suggested to investors to buy assets and not to hold (USD) dollars.
More than one commenter said they could not appreciate the full scope of the
merger but felt that it would have an impact. Some even speculated about a
New World Order--reminiscent of chatter three decades past.
On the minds of commentators is globalization and the possibility of a new
United States currency, the Amero, which exists in theory.
"Mygirl1" said the U.S. is making its way toward trading in the theoretical
"Amero"--as the Europeans utilize the Euro in Europe. This commentator also
worried that the world's bankers would head up a "new world order" and
control the world's finances.
But more than a new world order, the newly formed entity will have to title itself to show equity among the participants although Deutsche Boerse will hold 60 percent of the newly-formed merger, the Businessweek article said.
"TruePatriot-445959" said because financiers have always worried about oil-
rich countries trading oil in currencies other than the U.S. dollar, this
merger is helpful and will introduce more regulation and consistency into the
market which is helpful to the United States.
One commentator,"smeagol likes raw fishes," said the merger may fail in that
Frankfurter Boerse has been outbid before in a takeover. However, that was not the case in this instance. Deutsche Boerse was outbid by NYSE Group, in an attempt to acquire the London Stock Exchange in 2006. Frankfurter Boerse is the world's oldest securities exchange--created in the 1500s--and is one of eight owned by Deutsche Boerse.
If the deal is deemed legal by domestic and international regulators, Deutsche Boerse AG (XETRA:DB1) and NYSE Euronext (NYSE:NYX) will combine to create the largest venue for capital raising and equities trading. The combined group will offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions, according to a press release on the Euronext web site. The profit in the merger is found with the structure's ability to trade futures and options, industry experts claim.
According to a released statement by Euronext, the transaction is structured as a combination of Deutsche Boerse and NYSE Euronext under a newly created Dutch holding company, which is expected to be listed in Frankfurt, New York and Paris. On the NYSE Euronext side, this will be effected through a merger of NYSE Euronext and a US subsidiary of the new holding company in which each NYSE Euronext share will be converted into 0.4700 of a share of the new holding company. On the Deutsche Boerse side, the new holding company will launch a public exchange offer, in which shareholders of Deutsche Boerse may tender their shares of Deutsche Boerse for an equal number of shares of the new holding company.
Following full completion of the contemplated transactions, the former Deutsche Boerse shareholders would own 60 percent of the combined group and the former NYSE Euronext shareholders would own 40 percent of the combined group on a fully diluted basis and assuming that all Deutsche Boerse shares are tendered in the exchange offer. The transaction is expected to close at the end of 2011.
Principal financial advisers to Deutsche Boerse are Deutsche Bank and J.P. Morgan Securities LLC. Principal financial advisers to NYSE Euronext are Perella Weinberg Partners, and BNP Paribas. Legal advisers are Linklaters to Deutsche Boerse and Wachtell, Lipton, Rosen & Katz, Stibbe N.V. and Milbank, Tweed, Hadley & McCloy LLP to NYSE Euronext. Further financial advice is being provided by Credit Suisse, Goldman, Sachs & Co., Morgan Stanley & Co. Inc., and Societe Generale.
The release also said the group will have dual headquarters, in Deutsche Boerse’s newly built green tower near Frankfurt and in New York, at 11 Wall Street, home to the New York Stock Exchange trading floor, and will take advantage of its existing global operations. The Company will be led by a one-tier board with 17 members –15 directors plus the Chairman and the CEO. Of the 15 directors, nine will be designated by Deutsche Boerse and six by NYSE Euronext. Reto Francioni will be Chairman, and will also be responsible for group strategy and global relationship management. Duncan Niederauer will be Chief Executive Officer and will lead an Executive Committee with an equal number of current Deutsche Boerse and NYSE Euronext executives.
The four NYSE Euronext executives are Niederauer as CEO, based in New York, Dominique Cerutti as Head of Technology Services & IT, based in Paris, Lawrence Leibowitz as Head of Cash Trading and Listings and John K. Halvey as General Counsel, both based in New York. The four executives coming from Deutsche Boerse are Andreas Preuss as Head of Derivatives, based in Frankfurt, Jeffrey Tessler as Head of Settlement & Custody, based in Luxembourg, Frank Gerstenschlaeger as Head of Market Data & Analytics and Gregor Pottmeyer as Chief Financial Officer of the combined group, both based in Frankfurt.
Andreas Preuss will assume the role of Deputy CEO and President. Dominque Cerutti will assume the role of President, and Lawrence Leibowitz will assume the role of Chief Operating Officer.
The combined group will have 2010 combined net revenues of EUR[1] 4.1 billion/US$ 5.4 billion, and 2010 EBITDA of EUR 2.1 billion /US$ 2.7 billion, thus becoming the world’s largest exchange group by revenues and EBITDA. Based on 2010 net revenues, the combined group will earn approximately 37percent of total revenues in derivatives trading and clearing, 29 percent in cash listings, trading and clearing, 20 percent in settlement and custody, and 14 percent in market data, index and technology services.
Sources:
Businessweek.com
Euronext.com
MSNBC.com
The Chronicle U.S.A.
MSNBC.com
